* Share of "long" investors stabilizes in latest week
* More than half of active clients short long-dated bonds
NEW YORK, April 22 The difference between the
share of investors who are short longer-dated Treasuries than
those who are long increased to its highest level in about 11
months in the latest week, according to a survey released on
Tuesday by J.P. Morgan Securities.
The share of "short" investors exceeded the share of "long"
investors by 23 percentage points on Monday, up from 21 points
last week. This was the most since May 28, 2013, the firm said
in a statement.
This growing "net" short, which rises with bearish sentiment
on bonds, comes in advance of the Treasury Department's
scheduled $96 billion sales of coupon-bearing debt, which will
begin with a $32 billion auction of two-year Treasuries notes
at 1 p.m. (1700 GMT).
Benchmark Treasuries yields ended higher last
week at 2.71 percent in the wake of upbeat data on jobless
claims and regional factory activity.
Safe-haven demand for U.S. government debt also retreated
last week after the United States, Russia, Ukraine and the
European Union called for an immediate halt to violence in
eastern Ukraine, although conflict between the government
military and pro-Russian fighters have continued.
The share of investors who said on Monday their holdings of
longer-dated Treasuries were below the level in their portfolio
benchmarks rose to 34 percent from 32 percent last week.
By holding fewer longer-dated Treasuries, investors reduce
the duration or interest rate risk of their portfolios in
anticipation of a market drop, which generally causes
longer-dated bonds to generate bigger losses than shorter-dated
Conversely, longer-dated Treasuries produce higher returns
than short-term debt in a market rally.
The share of investors who said their holdings of
longer-dated U.S. government debt were greater than the holdings
in their portfolio benchmarks held at 11 percent for a second
week, J.P. Morgan Securities said.
Among active clients, viewed as making speculative bets in
Treasuries, none for a second week said they held more
longer-dated Treasuries than their benchmarks.
Fifty-four percent of the active clients said they were
short in duration versus their benchmarks, up from 46 percent
last week. This was the widest gap between active shorts and
longs since Feb. 13, 2013, J.P. Morgan said.
J.P. Morgan surveys 40 to 60 of its Treasuries clients
weekly, of which 60 percent are fund managers, 25 percent are
speculative accounts, and 15 percent are central banks and
sovereign wealth funds.
It asks 10 to 20 of its active clients each week about their
Treasuries holdings, of which 70 percent are speculative
accounts and the rest are money managers.
(Reporting by Richard Leong)